Jan. 22 (Bloomberg) -- European Union finance ministers
gave the green light for a group of interested member states to
move forward with designing a financial-transaction tax that may
bring in as much as 35 billion euros ($47 billion) a year.

Now that the finance chiefs have signed off, EU Tax
Commissioner Algirdas Semeta said he’ll present a plan for the
tax -- a broad-based levy on shares, bonds, derivatives,
repurchase agreements and other instruments -- in the next few
weeks. Eleven countries have committed to take part.

The initiative will be based on a prior transaction-tax
proposal for all 27 EU nations that failed to gain support, with
officials taking a fresh look at whether to exclude certain
trades like primary market purchases of sovereign bonds. The
prior plan aimed to target trading all over the world that
involved at least one firm whose headquarters resided in the tax
application zone, and also to discourage speculative high-frequency trades.

“It’s very good that some countries start first” to
implement the tax, said Dutch Finance Minister Jeroen
Dijsselbloem, adding that the Netherlands will wait before
deciding whether to sign up. “One of the criteria for us is our
pension funds. It’s very important that these pension funds are
not harmed by a new tax.”

British Objection

A so-called weighed majority of EU finance ministers backed
the measure today in a Brussels meeting. The U.K., home to the
Europe’s largest financial center, abstained along with Malta,
the Czech Republic and Luxembourg, Finnish Finance Minister
Jutta Urpilainen told reporters.

“It is not possible to take the view, expressed in the
authorizing decision, that the conditions set out in the
treaties are fulfilled,” the U.K. delegation said in a
statement explaining its abstention.

Luxembourg said allowing a group of countries to proceed
with the tax shouldn’t be “used as a tool to impose” trading
taxes on firms in non-participating states.

“U.K. entities will have to study the proposal closely to
see whether they will be subject to the tax if they trade with
entities established in one of the 11 participating countries,”
said Alexandria Carr, of counsel at Mayer Brown International
LLP in London.

Ireland took up the EU’s rotating presidency this month and
will coordinate meetings among nations even though it doesn’t
plan to join the tax. All 27 EU nations will be allowed to take
part, with participating nations having the final say.

‘Huge Ask’

The countries that have signed on to the plan are Belgium,
Germany, Estonia, Greece, Spain, France, Italy, Austria,
Portugal, Slovenia and Slovakia.

If the new proposal comes together and takes effect by Jan.
1, 2014, it would be a “huge ask” for companies to get
prepared in such a short time, particularly given transaction
tax regimes already planned in France, Italy and other nations,
said Mark Persnoff, a tax partner at Ernst & Young in London.

“One of the industry’s key concerns is timing,” Persnoff
said. “Firms will have to work to an extremely aggressive
timetable to get their systems ready. Firms are already
struggling with a myriad of regulatory changes.”